Four new hotels heading to Philadelphia

The lounge at the Indigo Hotel in New Orleans. An Indigo Hotel is planned for the Bailey Building at 1218 Chestnut St. (BRAD KAYE)

By Suzette Parmley, Inquirer Staff Writer

Posted: January 28, 2013

Calling it a building spree might be premature, but at least four hotels are now under construction or proposed for Philadelphia, the most since such development came to a halt for several years with the recession and its accompanying lending crunch.

The newest project, not yet formally announced, is a Hotel Indigo planned for the Bailey Building at 1218 Chestnut St., less than two blocks from a proposed W/Element Hotel at 1441 Chestnut.

A representative of InterContinental Hotels Group, which owns the Indigo brand, said late Thursday that the proposed hotel was expected to have about 150 rooms and open in the first half of 2014.

Regional hospitality expert Peter Tyson, of PKF Consulting USA, said that although financing was still a challenge, the new hotels here reflect the gradual thawing of the credit markets.

These are "pent-up pipeline additions that were slowed due to the recession and the accompanying dearth of financing," Tyson said. "However, two of the four projects [the Indigo and the W/Element] have yet to be financed, so we're not out of the woods just yet."

InterContinental Hotels has developed 50 Indigo locations worldwide. It has plans to double that number in three to five years, with 50 more Indigo hotels planned globally. Philadelphia is part of the brand's rapid expansion.

A principal in the Hotel Indigo project is Lenard Thylan, president of Thylan Associates Inc., a New York-based real estate development company.

Thylan declined to comment on the Philadelphia proposal.

Already under construction in the city are a 246-unit Home2Suites at 12th and Arch Streets and a Courtyard by Marriott at the Navy Yard with 172 rooms. Both are due to open later this year.

If all are completed, the four hotels would add a combined 1,268 rooms to the city's inventory of 11,600 - enough to support the expanded Pennsylvania Convention Center, which officials say requires about 12,500 rooms.

In addition, a new hotel tax will kick in July 1, boosting the rate to 15.5 percent from 15.2 percent, or 50 cents per room night - additional revenue that will go toward marketing the city's tourism industry.

Said Jack Ferguson, president and chief executive of the Philadelphia Convention and Visitors Bureau, which is charged with booking the Convention Center: "Each of the other hotels mentioned is important . . . and [will] help us serve multiple market-demand generators: commercial, government, leisure, international, as well as meetings and conventions."

But Ferguson wasn't coy about which would have the most impact: the 700-room W/Element Hotel. His agency has been pushing for a second hotel to complement the 1,408-room Philadelphia Marriott for large conventions or multiple gatherings.

"The more delegates we can house under one roof, within walking distance of the center" the better," he said.

Tyson called the W/Element "a game-changer." Once completed, the Indigo and W/Element will straddle Broad Street, providing lodging in an area that up to now has had few options.

Currently, the Bailey Building has ground-level storefronts and upper-level office space. The W/Element will be built from the ground up on a half-acre site that is now a surface parking lot.

Though the two hotels will help upgrade Chestnut Street, Tyson said, "there won't be direct synergy between the two" because they will cater to "two separate sub-neighborhoods."

Though it would not be a W, which is a "luxury" hotel brand, Hotel Indigo belongs to the "upscale" category two rungs below, according to Smith Travel Research.

InterContinental Hotels' website boasts that each Hotel Indigo "is unique and designed to reflect the local culture, character and geography of the surrounding area."

Upscale boutique hotels with fancy names - Hotel Palomar, Le Meridien, and Hotel Monaco, which opened Oct. 11 - have been cropping up in the city in the last three years.

Last week, Alexandria Frisch of Manhattan stayed at the Monaco at 433 Chestnut St., across from Independence Mall, with her boyfriend.

"I think it's good for Philadelphia," Frisch said. "I think it will attract more couples coming down for weekend retreats, versus just families coming down for tourism."